Europe’s trade chief Valdis Dombrovskis has fired a warning shot at new U.S. President Joe Biden over his plans to press U.S. authorities to “Buy American.”
In an interview with POLITICO and other media, Dombrovskis said the EU, the world’s biggest trade bloc, would closely monitor whether preferential treatment for U.S. contractors on public projects contravened international commitments.
“We will be assessing to which extent the U.S. complies with its [World Trade Organization] commitments under the global procurement agreement,” he said.
U.S. President Joe Biden has already started tightening U.S. rules that force federal authorities to buy from American suppliers. This could run foul of Washington’s commitments at the World Trade Organization (WTO), under which it wins access to other countries’ public procurement markets in exchange for keeping its own market open.
While signaling the EU was worried about Washington’s steps, Dombrovskis stopped just short of saying Biden was breaking WTO rules.
“As regards Buy American, this is something which will require some more in-depth assessment, what are the exact implications, what are the implications for EU companies, what does it mean for U.S. commitments in the WTO framework,” Dombrovskis said.
Dombrovskis was more upbeat on another area of dispute between the EU and the U.S.: Europe’s plans to tax big digital companies such as Amazon, Facebook and Apple.
“As regards digital taxation we see willingness of new U.S. administration to engage really actively … on finding a global agreement. Actually just yesterday I had a conversation with the new Treasury Secretary Janet Yellen exactly, among other things, to discuss this issue on digital taxation and she clearly indicated U.S. willingness to engage very actively and constructively in this and seek a global consensus,” he said.
More generally, the EU trade chief suggested transatlantic relations would be easier with the Biden administration, reiterating that Brussels had already proposed that Europe and America lift their reciprocal tariffs, agree new rules on subsidizing aerospace giants Airbus and Boeing, and work to tackle Chinese overcapacity.
“The signals we are receiving from the new Biden administration are broadly speaking encouraging,” he said. “We see much more willingness to address our bilateral trade disputes, so we put on table our concrete proposal for suspension of tariffs as concerns Airbus-Boeing tariffs and also steel and aluminum tariffs and also our retaliatory tariffs, and to address the real issues concerning those disputes, so the question of future disciplines in the area of civil aviation and the future of global steel overcapacity and countries really driving this, first and foremost China.”
But in a sign of tense negotiations ahead, Dombrovskis said he did not believe that the EU would need to scrap a subsidy scheme for Airbus known as “Repayable Launch Investment” or RLI, arguing the WTO had not ruled the scheme itself illegal, but rather the favorable terms under which it was provided.
“To our understanding, it does not imply that there should be discontinuation of repayable launch aid because that’s not what WTO ruling says. It rather questions RLI as it has been provided so far was not provided on market terms.”
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